Nigeria’s April inflation to hit 22.67% on rising food prices: FDC

The annual inflation rate in Africa’s biggest economy is estimated to increase again in April to 22.67 percent from 22.04 percent in the previous month, according to Lagos-based Financial Derivatives Company Limited.

The projection comes a few days ahead of the release of the Consumer Price Index report for April on May 15.

The FDC said in its latest economic bulletin that month-on-month inflation is projected to inch up to 2.29 percent in April from 1.87 percent in March.

Consumer price inflation has increased sharply since the Russia-Ukraine war in February 2022, disrupting energy and commodity prices.

“The major inflation culprit this time will be the planting season, which is reducing commodity supply,” analysts at FDC, led by economist Bismarck Rewane, said. “This is being compounded by a boost in aggregate demand (Easter and Ramadan celebrations) and an increase in liquidity (reintroduction of old naira notes).”

Food inflation is expected to spike by 0.17 to 24.62 percent from 24.45 percent in March, according to the firm.

“However, core inflation, which is inflation less seasonalities is projected to moderate marginally by 0.2 percent to 19.66 percent in April from 19.86 percent in March,” it said.

FDC said this would be largely supported by the relatively stable exchange rate and the decline in diesel prices.

It said after reaching a peak of N870, the price of diesel plunged to N640 in April, supporting the moderation in logistic costs.

“Despite the deceleration in the global food index for 12 consecutive months (129 points) and relatively stable exchange rate, both imported and locally produced commodities in Nigeria have remained high,” the analysts said.

They attributed the increase in domestic food prices to supply shortfalls due to the planting season, adding that the rise in imported commodity prices “is largely due to the transmission lag between global events and the impact in the domestic economy”.